CATEGORY - UPI

Guide to UPI Payments, Limits, Apps, and Transactions

UPI - 8 Dec 2023

Table of Contents

Payments: A comprehensive guide to India’s digital payment revolution

In today’s fast-paced digital era, making seamless and secure online payments has become indispensable. India, at the forefront of technological advancements, has witnessed a remarkable surge in adopting digital payment solutions, particularly the Unified Payments Interface (UPI). UPI, developed by the National Payments Corporation of India (NPCI), has revolutionized how Indians transact, enabling real-time money transfers between bank accounts, merchants, and individuals using a mobile application.

What is UPI payment?

UPI, or Unified Payments Interface, is a real-time payment system developed by the National Payments Corporation of India (NPCI). A mobile application allows users to transfer money between bank accounts, merchants, and individuals. UPI is based on the Immediate Payment Service (IMPS) infrastructure, enabling instant and secure transactions.

UPI payment apps: Revolutionizing digital transactions in India

The Unified Payments Interface (UPI) has emerged as a transformative force in India’s digital landscape, empowering seamless and secure real-time money transfers between bank accounts, merchants, and individuals using a mobile application. UPI’s widespread adoption has led to numerous UPI payment apps offering unique features and benefits.

Here are the top 5 UPI payment apps in India:

Payment links offer a multitude of advantages for businesses and individuals, transforming the way they accept and make online payments:

PhonePe App: PhonePe is another leading UPI payment app widely used for its cashback offers and comprehensive bill payment options.
BHIM App: BHIM, the official UPI app developed by the National Payments Corporation of India (NPCI), offers a simple and secure platform for UPI transactions.
Google Pay App: Google Pay, formerly Tez, is one of India’s most popular UPI payment apps. It is known for its user-friendly interface and integration with Google’s ecosystem.
Paytm App: Paytm is a household name in digital payments, offering services beyond UPI payments, including e-commerce, wallet, and financial services.
Amazon Pay App: Amazon Pay seamlessly integrates with Amazon’s e-commerce platform, making it a convenient choice for online shopping transactions.

UPI payment limit:

The maximum daily UPI transaction limit is Rs.1 lakh. However, the limit is Rs.5 lakh for bill payments and merchants. Some banks may have lower limits, and some may set limits based on the week or month instead of the day.

How does the Unified Payments Interface (UPI) work?

UPI links a user’s bank account to a virtual payment address (VPA), a unique identifier like an email address. When users initiate a UPI transaction, they enter the recipient’s VPA and the amount they wish to transfer. The UPI app then sends a collect request to the recipient’s bank. Once the recipient approves the request, the money is instantly transferred from the sender’s account to the recipient’s.

UPI transaction flow

The UPI transaction flow is as follows:

Initiation: The sender initiates the transaction by entering the recipient’s VPA and the amount to be transferred.
Collect request: The sender’s UPI app sends a collect request to the recipient’s bank.
Authentication: The recipient receives a notification to approve the request. They enter their UPI PIN to authenticate the transaction.
Authorization: The recipient’s bank authorizes the transaction and sends a confirmation message to the UPI app.
Settlement: The funds are transferred from the sender’s account to the recipient’s.

The process of UPI transactions

Making a UPI transaction is simple:

Open your UPI app and log in.
Select the “Send Money” option.
Enter the recipient’s VPA or bank account details.
Enter the amount you wish to transfer.
Review the transaction details and enter your UPI PIN to confirm the payment.

How to start using UPI payments

To start using UPI payments, follow these steps:

Benefits of UPI for merchants

UPI offers several benefits for merchants, including:

Instant Payments: UPI transactions are instant, eliminating waiting for funds to clear.
Seamless Integration: UPI can easily be integrated into payment gateways and POS systems.
Reduced Costs: UPI transactions are more cost-effective than traditional payment methods like cards.
Wider Reach: UPI enables merchants to reach a broader customer base, including those without bank accounts.

Benefits of UPI for customers

UPI offers several benefits for customers, including:

Convenience: A smartphone can make UPI transactions anytime, anywhere.
Real-time payments: Funds are transferred instantly, eliminating delays.
Security: UPI transactions are secured with multiple layers of authentication.
Cost-effectiveness: UPI transactions are generally accessible to customers.

Are UPI Transactions Safe?

UPI transactions are considered safe due to the following security measures:

Two-factor authentication: UPI transactions require two-factor authentication, typically a UPI PIN and an OTP (One-Time Password).
Secure transactions: UPI transactions are encrypted to protect sensitive data.
Regular updates: UPI apps are updated with security patches to address vulnerabilities.

How is UPI different from IMPS?

UPI and IMPS (Immediate Payment Service) are both real-time payment systems, but they differ in several aspects:

Linking bank accounts: UPI requires linking bank accounts to a virtual payment address (VPA), while IMPS requires entering the recipient’s bank account details.
Transaction initiator: UPI transactions can be initiated from the sender or recipient’s bank account, while IMPS transactions can only be created from the sender’s bank account.
Transaction limit: UPI has a maximum transaction limit of Rs.1 lakh, while IMPS has a maximum transaction limit of Rs.2 lakh.

Why is Easebuzz the Preferred Payment Gateway for UPI Payments?

Easebuzz is a popular payment gateway that offers a seamless integration with UPI. Here are some reasons why Easebuzz is preferred for UPI payments:

Robust infrastructure: Easebuzz has a vital infrastructure that can handle high-volume UPI transactions.
Easy integration: Easebuzz’s API and SDKs make integrating UPI into websites and mobile applications accessible.
Wide acceptance: Easebuzz is accepted by many online and offline merchants.

What is UPI 2.0?

UPI 2.0 is an upgraded version of UPI that introduces several new features and enhancements. Some of the critical elements of UPI 2.0 include:

Mandate-based transactions: UPI 2.0 allows users to set up mandates for recurring payments, such as utility bills or subscriptions.
Single sign-on (SSO): UPI 2.0 enables users to log in to various merchants using their UPI credentials.
Offline payments: UPI 2.0 facilitates offline payments using QR codes

Features of UPI 2.0

UPI 2.0 offers several benefits over the previous version, including:

Enhanced convenience: UPI 2.0 introduces new features that make UPI payments more convenient and user-friendly.
Improved security: UPI 2.0 incorporates additional security measures to further protect user data and transactions.
Expanded reach: UPI 2.0 incorporates additional security measures to further protect user data and transactions.

Key takeaways

UPI has revolutionized how Indians make payments, offering a convenient, secure, and cost-effective solution for digital transactions. As UPI continues to evolve, it is poised to play an even more significant role in India’s digital economy, driving financial inclusion and shaping the future of payments.

Additional tips for secure UPI transactions:

Beware of phishing scams: Never share your UPI PIN or OTP with anyone, even if they claim to be from your bank or UPI service provider.
Use strong PINs and Passwords: Set solid and unique PINs and passwords for your UPI app and bank accounts.
Install UPI app updates: Regularly update your UPI app to ensure you have the latest security patches.
Avoid public Wi-Fi for UPI transactions: Avoid making UPI transactions on public Wi-Fi networks to protect your sensitive data.

By following these tips and using UPI responsibly, you can enjoy the benefits of digital payments while safeguarding your financial security.

FAQ's

What is UPI payment?

UPI stands for Unified Payments Interface. It is a real-time payment system developed by the National Payments Corporation of India (NPCI). A mobile application allows users to transfer money between bank accounts, merchants, and individuals. UPI is based on the Immediate Payment Service (IMPS) infrastructure, enabling instant and secure transactions.

What is VPA in UPI payment?

VPA stands for Virtual Payment Address. It is a unique identifier like an email address linked to a user’s bank account in UPI. Instead of entering a bank account number and IFSC code, users can enter the recipient’s VPA to make a UPI payment.

How to make UPI payments?

To make a UPI payment, follow these steps:

Open your UPI app and log in.
Select the “Send Money” option.
Enter the recipient’s VPA or bank account details.
Enter the amount you wish to transfer.
Review the transaction details and enter your UPI PIN to confirm the payment.

How do you use a credit card for UPI payments?

Currently, you cannot use a credit card directly for UPI payments. However, some UPI apps allow you to link your credit card to your UPI account and use it for online transactions. The credit card creates a virtual prepaid card (VPC), which is then linked to your UPI account.

Note: UPI payments are primarily meant for transfers between bank accounts. Using a credit card through UPI may involve additional charges or limitations.

UPI Compliant: What is it, and where do you report issues?

UPI Compliant refers to adherence to the guidelines and standards set by the National Payments Corporation of India (NPCI) for the Unified Payments Interface (UPI). These guidelines ensure the security, reliability, and interoperability of UPI transactions. If you encounter any UPI-related issues, you can report them to the relevant Third-Party Application Provider (TPAP) or the bank linked to your UPI account. For unresolved problems, you can escalate the matter to NPCI through their website or designated channels.